Euro Rises on EU Defense Plan & Gold Gains on Trade Uncertainty (03.06.2025)

The euro surged to a four-month high as the EU proposed an €800 billion defense plan, increasing investor confidence. 

Meanwhile, gold neared record highs amid U.S. tariff uncertainty and a weaker dollar. The yen remained steady on growing BOJ rate hike expectations, while the pound gained on a strong UK rate outlook. The market focus now shifts to the upcoming ECB meeting and the U.S. nonfarm payroll report.

Yen Steady Near 149 as BOJ Hints at Possible Rate Hikes

The yen held near 149 per dollar, its strongest in five months, benefiting from a weaker dollar amid a stronger euro and Trump’s tariffs. While Trump eased tariffs for some automakers, retaliatory measures pressured the dollar. BOJ Deputy Governor Uchida signaled potential rate hikes if economic forecasts hold, noting financial conditions remain loose with minimal JGB reductions.

Key resistance is at 152.00, with further levels at 154.90 and 156.00. Support stands at 148.60, followed by 147.10 and 145.80.

Safe-Haven Demand Lifts Gold Amid US Tariff Uncertainty

Gold rose above $2,920 per ounce, nearing record highs, as a weaker dollar and trade uncertainty drove safe-haven demand. Trump granted US automakers a one-month exemption from 25% Canada-Mexico tariffs and hinted at more changes. A US official suggested lifting the 10% tariff on Canadian energy if trade conditions are met. Meanwhile, China filed a revised WTO complaint in response to new US tariffs. Investors await the non-farm payrolls report for Fed policy signals.

Key resistance stands at $2,923, with further levels at $2,955 and $3,000. Support is at $2,860, followed by $2,830 and $2,790.

Pound Surges on BoE Policy Outlook

The British pound climbed to 1.289, its highest since November 12, increased by a weaker dollar, US economic concerns, and tariff effects. Expectations of prolonged high UK rates also supported the pound. BoE Deputy Governor Ramsden warned of persistent wage-driven inflation but noted rate cuts could accelerate if needed. The pound appears less exposed to US tariffs after Trump hinted at a possible UK trade deal.

If GBP/USD breaks above 1.2920, the next resistance levels are 1.2980 and 1.3050. On the downside, support stands at 1.2860, with further levels at 1.2760 and 1.2660 if selling pressure increases.

Precious Metals Gain as U.S. and China Exchange New Tariffs

Silver surged past $32.5 per ounce in early March, fueled by a weaker dollar and safe-haven demand amid escalating trade tensions. The U.S. imposed tariffs on Canada, Mexico, and an additional 10% on Chinese goods, raising China's total tariff to 20%. In response, Canada levied a 25% tariff on $155 billion of U.S. imports, while China announced 10%-15% tariffs on U.S. goods starting March 10 and new export restrictions. Traders now await Friday’s U.S. nonfarm payrolls report for Fed policy signals.

If Silver breaks above $32.75, the next resistance levels are $33.15 and $33.80. On the downside, support is at $31.00, with further levels at $30.20 and $29.75 if selling pressure increases.